ASSIGNMENT-II

Cash in hand and balance with RBI and 2.plus 3.Borrowing from RBI .Bank rate structure influences the entire rate structure A rise in the bank rate leads to rise in other market interest rates .if net liquidity ratio falls below a minimum ratio fixed by RBI net liquidity of borrowing banks comprises 1. The Reserve Bank of India decides the volume and value of currency notes to be printed which depends on the yearly increase in currency notes for circulation purposes replacing the damaged and rejected currency notes along with reserve future requirements..a fall in bank rate results in a fall in other market rates .Open Market Operations Through the technique of open market operations.increasing the the cost of borrowing Similarly .Investments in government and other approved securities minus 4. The responsibility of RBI is to asses the requirement of currency notes in denomination wise and places the indent with the various government presses through government of India.
.a commercial bank can borrow from RBI at this rate only if it maintains a minimum net liquidity ratio to its total demand and all its liabilities and it will have to pay a penal rate of interest to RBI .SBI 3.Balances in currency account with other banks . 1934.Net Liquidity Ratio In order to check excessive borrowing from the RBI by commercial banks.if any.reducing the cost of borrowing 2.Bank Rate The bank rate is the rate at which the RBI advances to the member banks against approved securities . The roles of the Reserve Bank of India to maintain the currency level are as per the Reserve Bank of India Act.the central bank seeks to influence the excess reserve position of the banks by purchasing and selling the govt securities .According to this . There are certain measures taken by RBI for the credit control 1.It is the responsibility of RBI to manage and maintain the currency note.commercial papers etc. On the basis of advice by RBI Government decides the various currency denominations. There is the close co-ordinations between government and RBI designing the bank notes also along with related security features.

Cash Reserve Requirement (CRR) The central bank of a country can change the cash reserve requirements of the bank in order to effect their credit creation capacity .Statutory Liquid Ratio (SLR) Banks were required to maintain liquid assets in the form of cash.Selective Credit Controls Selective credit control are qualitative credit control measures undertaken by the central bank to divert the flow of credit from speculative ans unproductive activities to productive and more urgent activities
.It reduces commercial banks capacity to create credit and thus helps to check inflationary pressure b).gold and unencumbered approved securities equal to not less than 25% of their total demand and time deposits liabilities .This minimum statutory liquidity ratio is in addition to the statutory cash reserve ratio The RBI have got the power to change this minimum ratio.4.It makes larger resources available to the government
6.There are two reasons for raising statutory liquidity requirements by RBI a).An increase in the cash -reserve ratio reduces the excess reserve of the bank and a decrease in the cash -reserve ratio increase the excess reserves 5.